FIG Regime: 4-Year UK Tax Break for Expats

For many years, the UK’s tax landscape for arriving residents was defined by the complex and often controversial "remittance basis." However, as of April 2025, the environment has shifted significantly.

If you are considering a move to the UK or have recently arrived, you are entering a new era of fiscal policy characterized by the Foreign Income and Gains (FIG) regime.

The FIG regime offers a powerful, time-limited window of opportunity for qualifying individuals. Providing that you meet specific criteria, you can enjoy a four-year period where your foreign income and gains are entirely exempt from UK tax, regardless of whether you bring those funds into the country.

At Global Tax Consulting, we recognize that navigating these changes requires precision. Understanding the nuances of the FIG regime is not merely about compliance; it is about ensuring you do not leave significant tax savings on the table.

Understanding the Four-Year FIG Regime

Are you trying to work out whether you qualify? The cornerstone of the new expat tax offering is the four-year FIG regime. This policy is designed to attract high-net-worth individuals and skilled professionals by offering a simplified, highly competitive tax environment during their initial years of UK residence.

Under this regime, qualifying individuals are not required to pay UK tax on their foreign income (such as overseas rental income or dividends) or their foreign capital gains (such as the sale of an overseas property or stock portfolio).

To qualify for the FIG regime, you must be considered a qualifying new resident as follows:
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• You must have been a non-UK tax resident for at least ten consecutive tax years immediately preceding the tax year of arrival to the UK; and
• You must be within your first four tax years of UK residence following that ten-year period of non-residence.

It is important to note that opting into this regime is not without its costs. By making a claim for FIG relief, you voluntarily forfeit your entitlement to the UK personal allowance of £12,570 and the capital gains annual exempt amount of £3,000.

As such, the FIG regime tends to benefit those with substantial foreign income. If your overseas income is relatively modest, the loss of your personal allowance may outweigh the tax relief you would receive.

Consider the following scenarios:

a) High foreign income, low UK income: FIG relief is likely beneficial because you shelter significant foreign earnings while losing a personal allowance you would not fully use anyway.
b) Moderate foreign income, full UK salary: The calculation becomes tighter. You may need professional advice to determine whether claiming relief makes sense.
c) Low foreign income: Claiming relief may actually increase your overall tax burden due to the lost allowances.

You can find further details on qualifying new resident here and loss of allowances here.
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The Freedom of Remittance

What makes the FIG regime simpler than the old remittance basis? One of the most significant advantages of the FIG regime is the ability to remit income and gains to the UK freely.

You can bring your foreign income and gains into a UK bank account, use them to purchase a UK property, or invest them in UK businesses without incurring a further UK tax charge. This simplified approach reduces the administrative burden on expats and allows for greater financial flexibility during the relocation process.

Employment Income and Overseas Workday Relief (OWR)

Are you moving to the UK as an employee with international duties? For many professionals moving to the UK, employment income forms the bulk of their earnings. The FIG regime works in tandem with a refined version of Overseas Workday Relief (OWR). This relief is specifically designed for individuals who reside in the UK but perform a portion of their employment duties outside of the country.

If you qualify for the FIG regime, you will be eligible for OWR which allows you to exclude the portion of your earnings related to your overseas workdays from UK taxation.
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The maximum amount of employment income that can be exempt under OWR is now subject to an upper limit. The relief is capped at the lower of:
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1. 30% of your qualifying employment earnings.
2. An annual financial limit of £300,000.

By way of example, if your total qualifying earnings are £1,500,000, 30% is £450,000. However, because of the annual cap, your maximum exempt amount will be limited to £300,000.

You can find further guidance on OWR here.
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The "All or Nothing" Rule for Self-Employed Income

Are you relocating with a sole trade or freelance business? While the FIG regime is generous for passive income and employment income scenarios, it is significantly more restrictive for self-employed individuals. If you are running a business as a sole trader, the rule is "all or nothing".

If the business activities are managed and performed wholly overseas, you can use the FIG regime to exempt the entire profits from UK taxation.

However, if any of the business activities are managed and performed within the UK, the income is wholly subject to UK taxation even if you split your time between the UK and overseas.

As such, in practice, it will be extremely difficult to get to a position whereby self-employment profits are not taxable in the UK given it is impractical to live in the UK and wholly run the business overseas.

You can find further guidance on qualifying income here.

Crucial Time Limits for Self-Assessment Claims

Do not assume the relief applies automatically. The FIG regime is not applied automatically. To benefit from these tax breaks, you must proactively make a claim through your UK Self-Assessment tax return. Accuracy in timing is vital, as missing a deadline can result in the total loss of relief for that tax year.

The time limit for making a claim for FIG relief is the anniversary of 31 January following the end of the tax year to which the claim relates. This effectively gives you a 12-month window beyond the normal filing date.

To illustrate this, consider the following timeline for the 2025-26 tax year:
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• Tax Year Ends: 5 April 2026.
• Normal Filing Deadline: 31 January 2027.
• FIG Claim Deadline: 31 January 2028.

This same time limit applies to both foreign income claims and foreign capital gains claims. While the extra 12 months provides a buffer, we strongly advise against delaying your claim. Early filing allows for a clearer picture of your long-term liabilities and ensures that any UK tax return is consistent with your overall residency status.

You can find further details about HMRC time limits here.
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Transitioning Beyond the Four-Year Mark

What happens once the FIG window closes? The FIG regime is a powerful tool, but it is a temporary one. Once you enter your fifth year of UK residence, you will typically be taxed on your worldwide income and gains under the arising basis.

The transition at the end of year four represents a significant "tax cliff." Without prior planning, you may find yourself suddenly liable for 45% tax on foreign income or 24% on foreign gains.

To mitigate this, you could consider the following planning:
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• Re-basing assets before the four-year window expires i.e. buying and selling to increase the base cost.
• Utilizing tax-efficient investment wrappers that are recognized by HMRC such as pensions, ISAs or premium bonds.
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How Global Tax Consulting Can Assist

Relocating to a new country is a significant life event, and the tax implications are often the most complex part of the journey. The UK’s FIG regime offers an incredible opportunity to settle into UK life without the immediate burden of worldwide taxation, but the rules are rigid and the deadlines are unforgiving.

Whether you are an executive utilizing Overseas Workday Relief or an entrepreneur with a diverse global portfolio, we ensure that your transition to the UK is as tax-efficient as possible.